There’s building a business…and then there’s “building” a business in South Florida. On the one hand, there’s the business plan side that includes everything from competitive analysis to sales and marketing plans to manufacturing and inventory to profits and losses. Many business owners get this part of the equation. But most are much less comfortable with hiring commercial general contractors. No reflection on you. Even people in the business, including architects, property owners, and real estate investors may not comprehend the business nuances of commercial construction.
Ask the Right Questions. Demand the Right Answers.
Even experienced business owners don’t always know the questions to ask or how to really break down contractor bids beyond just looking at the lowest price. Some contractors play games with the whole bidding process – securing jobs with low-ball bids, doing shoddy work, then charging exorbitant change order fees.
Remember this is your business – and your life. It pays to be vigilant and assertive when checking out potential local contractors. Don’t just hire someone because of a reference or a family friend. Do your own due diligence. Let the five keys guide you. You’ll disqualify the wrong contractor, while hiring a reputable commercial general contractor who will bring your project in on time, on budget and with your complete satisfaction.
Key #1: Check Contractor Histories, Credentials and Reviews
Start with the basics: go to the Florida Department of Business & Professional Regulation website and pull up the company, their qualifier name (the license holder), verify it exists and is active. Is all their documentation up to date? What does their history look like? Any complaints? Also check with the local Better Business Bureau for ratings, complaints and how they resolved those complaints. Get a better view of contractors by visiting their websites and checking out attributed testimonials (i.e. with full names and contact information for references.)
Key #2: Check Their References
Don’t be afraid to ask contractors for references. Any hesitancy or inability to provide what you want is a red flag. (Make sure they’re not family and friends, but valid references.) You may be working with these people for months or a year, so you want to be sure the contractor will deliver as promised. Be sure to inquire as to the contractor’s supervisors, managers, and other staff. Were they easy to work with? Are they expected to be a part of your project team? Finally, compare the quality of the projects done by prospective commercial contractors by inspecting their work.
Key #3: Get to the Bottom Line about Costs
As we said in our introduction to selecting general commercial contractors in South Florida, cost is not the only factor, but it is an important factor. And how a general contractor arrives at a bottom-line fee requires asking a lot of questions. All costs should be illustrated in a divisional itemization with as much detail as may be required to make accurate comparisons. Following are some of the key questions in the form of a checklist, which can be of value when issuing a Request For Proposal (RFP):
Are there any pre-construction costs and if so, what are they?
- Not always warranted but always valuable, can occur during the gap time during planning, design and permitting prior to a construction start.
- Fees include time to assist in specifying for value, field investigation, program scheduling, phasing, permitting strategy, feasibility and constructability, budgeting, meetings, and due diligence costs.
What are the “soft costs?”
- Such as general conditions or requirements to build; costs for supervision, management, permitting, safety, cleaning, public safety, hoisting, communications, temporary facilities, etc.
What will I pay for Contractor’s services?
- The basis for its fee: a stated fee or percentage arrangement based upon costs. Learn more about the benefits of a Design-Build process.
How transparent is the commercial general contractor in disclosing its costs?
- The answer here will generally be relative to the expected contract relationship. An owner should expect less disclosure from a “lump sum” agreement while a “cost plus a fee” agreement will require increased fiduciary responsibility of the Contractor. The builder should get three or more bids from its vendors, more from the more common trades, but possibly less than three when specialty trades are involved. It should be noted that this fiduciary responsibility will prohibit the professional contractor from stacking the deck with expensive subcontractors, collusion, etc.
- In either example, “Shopping” takes place at the contractor level, however, the cost plus a fee arrangement will allow for owner participation in subcontractor selection and even pricing negotiations. There are hybrids of these relationships and arrangements for shared savings as well.
Note! It’s important to understand that if numbers 1 to 3 meet your criteria, there is no need to “bid” your project to multiple general contractors as the rules of the road, fees, selections, etc. can be established above.
Key #4: You Get What You Pay For: Beware of the Lowest Bidder
There’s a good reason we’ve mentioned low bids twice, but… when selecting between multiple contractor bids, don’t necessarily accept the lowest offer. You know the old sayings, “You get what you pay for” and “Cheap is expensive”? It’s especially critical in selecting a local contractor as the scope of work and inclusions/exclusions can be far more important than the number. Beware low-ball quotes meant to win a job at any cost.
Key #5: Ask for Financials and You Won’t Get Caught Short
Getting stuck because local contractors simply can’t cover the costs of construction is every business/property owner’s nightmare. The best contractor is not only the best builder, but the one with the financial history to complete your project to your full satisfaction. Consider requiring a payment & performance bond, a contractor who can secure such a bond is already steps ahead of its competition. If a contractor can’t pay his/her subcontractors, your project’s completion is in jeopardy. You’ve got to do your due diligence in this critical aspect of hiring a contractor.
GSD Contracting Offers Professional Commercial Contracting Services
Whether you’re building in Palm Beach County, Martin County, Broward County or Miami-Dade County, to hire the right contractor at the right price – and avoid contractor issues throughout your project – you’ve got to do your due diligence. This means…
- Hiring the most qualified, not the lowest bidder.
- Checking the contractor’s licensing information and history online.
- Understanding how they charge and asking about all the costs not included in their proposal.
- Making sure they have credible references and checking out the quality of their work.
- Obtaining the contractor’s financials.